Tata Steel, India's largest manufacturer of alloys, has announced the closure of its strip products business in South Wales as it faces difficulties brought by surging Chinese imports in Europe as well as adverse currency movements. The closure might leave 250 employees at the operation jobless.
In a filing to the Indian stock exchanges Thursday, Tata Steel said it is closing down the unit in order to reduce costs and focus on manufacturing higher-value products.
"The company will concentrate U.K. production of hot rolled coil at its hot strip mill in Port Talbot which has benefited from quality and capacity upgrades," said Stuart Wilkie, director of Strip Products U.K. "Some coil processing facilities including the sibling hot strip mill at Llanwern, Newport, will come out of production but will be retained so they can be restarted in more favorable market conditions," he added.
Although the company made it clear that employees at the Llanwern mill would be redeployed within the business, workers' union, Unite, said the mothballing of the Llanwern steel mill will lead to the loss of 250 jobs.
Last month, Tata Steel proposed 685 job cuts for two plants in Rotherham and Stocksbridge in South Yorkshire and 35 job cuts at Wednesbury in West Midlands from next year.
The workers' unions have called for government intervention and support for skilled jobs and manufacturing.
"Tata Steel also needs to honour its commitments as a responsible employer and work with the unions in limiting the damage that these job losses will have," said Harish Patel, acting national officer at Unite.
Tata Steel said it has invested more than 350 million pounds ($546.7 million) to improve the steel industry in Wales in the past five years, but a tough business environment led to the closure of the Llanwern mill.
"In the teeth of a recession we rebuilt a blast furnace, improved the Port Talbot hot strip mill and upgraded the capabilities of our world-class galvanizing line at Llanwern. We also built new steel processing technology at Llanwern -- a site which will continue to specialize in finishing and distributing our steel products," it said.
For the quarter ended June, turnover at Tata Steel Europe was 178.55 billion rupees ($27 million), down from 207.41 billion rupees in the corresponding period of last year. The company posted an operational loss of 1.24 billion rupees against 1.36 billion rupees a year ago.
The company had then attributed the decline in turnover and EBIT to But surging EU imports, especially from China, and, in the case of the U.K. operations, the appreciation of the pound against the euro, led to lower turnover and EBIT.
European steel demand is increasing modestly. But imports from China, in particular, and the adverse sterling euro currency movement are impacting the U.K. operations.
Tata Steel has three integrated steelmaking sites, at IJmuiden in the Netherlands, Port Talbot in South Wales, and Scunthorpe.
The company also operates rolling mills and coating lines across Europe.